DRAFT How to Safeguard Your Nonprofit against Fraud and ...

How to Safeguard Your Nonprofit against Fraud and Embezzlement: Best Practices, Common Pitfalls, and

Practical Strategies

January 15, 2014 Venable LLP

Washington, DC

Moderator: Jeffrey S. Tenenbaum, Esq., Venable LLP

Panelists: William H. Devaney, Esq., Venable LLP

Joe Stephens, The Washington Post Nidhi Rao, CPA, CFE, CFF, CIA, BDO USA LLP

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Presentation

How to Safeguard Your Nonprofit against

Fraud and Embezzlement:

Best Practices, Common Pitfalls, and Practical Strategies

Wednesday, January 15, 2014, 12:30 p.m. ? 2:00 p.m. ET Venable LLP, Washington, DC

Moderator: Jeffrey S. Tenenbaum, Esq., Venable LLP

Panelists:

William H. Devaney, Esq., Venable LLP Joe Stephens, The Washington Post

Nidhi Rao, CPA, CFE, CFF, CIA, BDO USA LLP

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Upcoming Venable Nonprofit Legal Events

February 19, 2014 - Implementing a Bring-YourOwn-Device Policy: What Your Nonprofit Needs to Know

March 20, 2014 - The OMB Super Circular: What the New Rules Mean for Nonprofit Recipients of Federal Awards (details coming soon)

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Agenda

Recent Examples of Nonprofit Fraud and Embezzlement

Why Does Employee Fraud Occur? Why Are Nonprofits Frequently the

Victims of Fraud and Embezzlement? Effective Compliance Programs Controls Measures to Reduce the Risk

of Fraud What to Do If an Issue Is Discovered?

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Recent Examples of Nonprofit Fraud and Embezzlement

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American Legacy Foundation

In November 2013, Sen. Charles Grassley (R-Iowa), ranking member of the Senate Judiciary Committee, opened an investigation into the Washington, D.C.-based American Legacy Foundation, a nonprofit dedicated to educating the public about the dangers of smoking.

The investigation was spurred by a Washington Post report that the Foundation had suffered an estimated $3.4 million loss as a result of alleged embezzlement by a former IT specialist.

According to the Post report, the executive ? who was in charge of both ordering computer equipment and checking it in as being received ? generated 255 invoices for computer equipment sold to the Foundation from 1999 to 2007, 75 percent of which were fraudulent.

When a whistleblower came forward (after his concerns were ignored years earlier), the Foundation hired forensic examiners and notified the Board of Directors.

The U.S. Attorney's Office told the Post that its investigation of the

matter had been closed in February 2012, because the Foundation

had taken more than three years to report the missing equipment

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and lacked reliable records.

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Vassar Brothers Medical Center

In late October 2013, the Post reported that in 2011, the Vassar Brothers Medical Center in Poughkeepsie, New York reported a loss of $8.6 million through the "theft" of certain medical devices.

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